Climate Disclosure Regulations Are Pushed Back (Newsletter 12/3)

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Regulatory Updates

SEC Climate Disclosures Delayed

Securities lawyers reveal that the SEC’s climate risk disclosure requirements are taking longer than expected which may delay the mandates. With fear of litigation looming, it is clear the SEC will need to release significant data backing investors’ need to access ESG data to make sound investment decisions. While the SEC is said to be using the TCFD framework as a reporting benchmark, a recently departed SEC staffer mentioned it will be difficult to enforce full TCFD disclosures. An insider reported that the required disclosures aren’t likely to be published before February 2022.

EU Pushes SFDR Implementation to 2023

In similar news, the European Commission will postpone the implementation of the regulatory technical standards (RTS) supplementing the EU Sustainable Finance Disclosure Regulation (SFDR), from July 1, 2022 to January 1, 2023. The regulation has been pushed back multiple times before—this time citing the complexity of the matter, hoping the delay will lead to a “smooth implementation” by “manufacturers, financial advisers, and supervisors.”

ESG Ratings & Reporting

ISSB to Publish Prototype Disclosure Requirements

A few weeks ago, we discussed the new International Sustainability Standards Board (ISSB), which consolidates SASB and CDP and includes participation from TCFD (and no mention of GRI). This week, the ISSB announced it will create global sustainability disclosure standards, finalize the ISSB consolidation by June 2022, and publish a prototype of the climate and ESG disclosure requirements, which includes input from TCFD and the International Accounting Standards Board.

ESG Book Aims to Provide Free Sustainability Data

ESG Book, created by Arabesque, among others, is a new platform where companies can upload their ESG data, making it available for free to users of ESG Book. ESG Book aims to improve the accessibility and standardization of ESG data by providing a consistent format for disclosure that is available to everyone. The platform is also interactive, allowing interested parties to request information from any of the 10,000 companies for which Arabesque has collected data.

Investor Updates

Janus Henderson Builds ESG Investment Team

Janus Henderson has appointed six new hires to the ESG Investment Team, led by Paul LaCoursiere. The expansion of Janus Henderson’s team is intended to further ESG integration and enhance the firm’s technical expertise in ESG investment research. These new hires include:

  • Dan Raghoonundon, ESG Research Lead – London
  • Charles Devereux, ESG Research Analyst – London
  • Olivia Jones, Junior ESG Research Analyst – London
  • Jesse Verheijen, ESG Data Analyst – London
  • Bhaskar Sastry, ESG Content Manager – London
  • Blake Bennett, Governance and Stewardship Analyst – Denver

Lazard Bolsters Sustainability Investment Capabilities

Lazard Asset Management announced two new portfolio managers, Koen Popleu and Monika Kumar. Both new hires will be based in Belgium and will create a team focused on investing in themes related to a more sustainable economy. In 2021, Lazard has hired over a dozen team members to bolster its sustainable investment offering.

Company Spotlight

Chesapeake Energy Enhances ESG Disclosure with New Website

Chesapeake Energy Corporation has launched a new website to host its ESG commitments and data. The company has set a target to achieve net zero direct greenhouse gas (GHG) emissions by 2035, created new diversity, equity, and inclusion commitments, and revised executive compensation structures to align with environmental performance. In addition to policies and commitments from the Board, the site hosts a roadmap to net zero and will be used to report progress towards this goal.

Allbirds Uses ESG as Competitive Differentiator

Allbirds bills itself as a sustainable alternative to traditional sports footwear brands such as Nike, offering shoes made primarily of wool rather than plastics and foams. While Allbirds reported a loss at its first earnings call, it has aligned itself with a trend that should see substantial growth for decades to come—ESG-related investments are seeing growing inflows from investors and Piper Sandler reports that sustainability is the top political and social issue among teens. Even if Allbirds does not takeoff, the brand’s growing renown may be a wakeup call to larger retailers that have yet to prioritize sustainability.

Sustainability Makes the Holiday Wish List

A recent survey from Accenture shows consumers’ increasing consciousness regarding the environmental impact of their purchases. The survey points to growing awareness of the climate crisis as well as a desire to help others due to the pandemic. Accenture expects this to materialize in the form of increased holiday spending on sustainable retail goods. In the past six months, searches on Etsy for eco-friendly, sustainable, and biodegradable gifts are up 48% compared with the same time in 2020. Other growing trends this holiday season include giving secondhand gifts and avoiding single-use gift wrapping.

Companies Feeling the Heat

Amazon Covid-19 Settlement Highlights Board Focus on Workforce & ESG

Amazon’s recent settlement with California over employee Covid-19 notifications is the latest example of how pandemic-related workforce safety has emerged as a top ESG concern for corporate boards. The pandemic has created new concerns for workers, managers, and investors alike, including worker health and safety, adequate compensation, and workforce equity and diversity. The half-billion-dollar fine is peanuts to Amazon, but the lawsuit suggests that the second largest retailer in the U.S. will take social issues among its workforce more seriously going forward.

Featured ArticleFidelity’s Climate Rating: What you Need to Know

If Fidelity is on your shareholder list, the institution’s new climate rating system could impact you soon. Fidelity International made waves by announcing its commitment to cutting the carbon footprint of its investment portfolios in half by 2030 compared to 2020 levels. Furthermore, Fidelity publicly announced it plans to achieve net zero emissions in its portfolios by 2050. 

To achieve this, the firm created a proprietary “Climate Rating”, which analyzes portfolio companies’ alignment to a net zero pathway. To see how Fidelity’s Climate Rating will impact you, continue reading.

News Bites